US propylene maker seeks 17 cent/lb Feb hike, undercutting rival

HOUSTON (ICIS)--A US propylene producer has nominated a 17 cent/lb ($375/tonne, €285/tonne) increase for February, undercutting a 22 cent/lb increase recently nominated by another supplier, market sources said on Wednesday.

The latest nomination, which represents a 31% increase from January, refers to chemical-grade propylene (CGP) contracts.

US CGP contracts settled at 54.50 cents/lb in January. US propylene contracts usually settle at the beginning of the month being negotiated.

A substantial contract increase for February had been expected after a spike in the propylene spot market in January, particularly for refinery-grade propylene (RGP), the price of which soared last month on the back of higher alkylation price levels.

Alkylation values, which rose by nearly 60% in January, can affect the price of propylene because refiners can use RGP to make alkylate in gasoline or sell it as a feedstock to the chemical industry, depending on which side pays more for the product.

The increase in alkylation values in January resulted from higher gasoline prices and a sharp drop in isobutane prices, according to sources.

Alkylation values were assessed at 62 cents/lb last week, slightly down from the latest RGP deals done at 64 cents/lb.

RGP was offered on Wednesday at 66.50 cents/lb with no bids. The product traded at 39.50 cents/lb in the first week of January.